Sunday, June 15, 2008

Divorcing, But Still Living Together, in a Bad Housing Market

There's a great article in today's Boston Globe Sunday Magazine, by Lisa Prevost, about the effect of the declining housing market, and the credit squeeze, on divorcing couples, many of whom are now forced to stay together longer than they may have wanted or intended: Two Exes, One Roof - The Boston Globe ("Two Exes, One Roof - What happens when a divorcing couple meet a slow housing market? Usually, it's not pretty.") As you can see from the excerpt below, I am one of the attorneys quoted in the article.

"DESPERATE" IS AN APT DESCRIPTION FOR ANY NUMBER of homeowner scenarios these days, as declining home values and tighter credit continue to squeeze sellers. When it comes to divorcing couples, however, the steep drop-off in housing sales is making some bad situations truly awful. Dramas are playing out across the region as couples who no longer want to stay together, but can't afford to live apart, are winding up prisoners in their own homes. Either houserich and cash-poor, or simply overextended on all fronts, these couples are retreating to the far corners of their houses as they await the buyer who will free them.

Family law attorneys, mediators, and real estate professionals say that while this scenario isn't necessarily new, its rising incidence is very much a sign of the times. Divorcing couples who borrowed heavily against their homes when values were soaring several years back are now scratching for enough equity to cover their mortgage, lawyer bills, and a fresh start. The financial strain is forcing more of them to stay put until the house sells, a situation that is almost always very uncomfortable.

"In a number of my cases, couples are sharing houses but using separate bedrooms, and it remains to be seen what impact all of this will have on the children," says David A. Hoffman, an attorney, mediator, and founder of the Boston Law Collaborative.

....

Barbara Shapiro, a certified divorce financial analyst and vice president of HMS Financial Group in Dedham, agrees that the sliding market is forcing more divorcing couples to remain housemates. The cases she sees typically fall into one of two categories. "You have the couple that's already divorced and had decided they were going to split the house once it's sold. And they can't sell it, or it doesn't make sense to sell it. So they're scrambling to adjust," she says. "And then there are people who are saying, 'We can't get divorced - we can't afford it.'"

The latter sentiment turned up unexpectedly in a divorce case handled last year by Steven Ballard, a lawyer in Worcester and Wellesley. He was representing a woman in particularly bleak circumstances: She had a restraining order against her husband, who had moved back in with his mother. The wife worked but couldn't cover the mortgage payments and expenses on their house without her husband's income. Because they owed more than the house was worth, foreclosure loomed as a possibility. Still, Ballard didn't see taking the husband back as an option. Much to his dismay, his client did. The couple reconciled. "I'd seen financial problems lead to divorce," Ballard says, "but I hadn't seen it save a marriage."